Beginning a new year often inspires us to set goals for positive change. What better way to start than with the best financial New Year’s resolutions? They’re more than just wishes; they’re steps toward a more secure financial future. Whether it’s saving for a dream vacation, investing in your future, or simply managing your daily expenses more efficiently, these resolutions can lead you through a more fulfilling year.
Tackling bad spending habits is an important part of this journey. It’s easy to fall into the trap of impulsive buys or unnecessary expenses, but with the right mindset and strategies, you can turn things around! Let’s dive into ten practical resolutions that will help you use and save money wisely.
But First, Why Is It Important to Save?
A study found that while Filipinos are good at putting money aside, many do it only after expenses. Only 29% have specific savings goals and save money to meet them. In addition, 94% of those surveyed save their money in low-interest bank accounts, which might not grow their savings that much.
This new year, having resolutions to save money is crucial for several reasons:
Preparing for Emergencies
The COVID-19 pandemic showed us how important it is to save for emergencies. People suddenly lost their jobs and faced unexpected medical bills. Having savings for these unforeseen events means you’re ready for life’s surprises. It’s about having a safety net to help you and your family stay financially stable during hard times. Saving for emergencies is a smart way to protect yourself from the unknown.
Maintaining Good Credit Scores
If there is no threat of emergencies, why is saving still important? This is where your credit score comes in. A good credit score is a vital part of your financial health. It plays a big role in your ability to get loans, property leases, and more.
Money lenders like banks can do a credit history check in the Philippines to see if you’re a reliable borrower. A history of smart saving can positively impact your credit score, making it easier to get loans when you need them.
Avoiding Harmful Spending Habits
Your spending habits also affect your credit score. Overspending can lead to high debts, which is one of the reasons for a loan rejection. On the other hand, wise spending and consistent saving can enhance your score. By managing your expenses and saving diligently, you can maintain a healthy financial profile, which is key in today’s economy.
Saving is crucial because it provides a safety net for unexpected expenses and helps achieve financial goals. However, it’s not just about saving money for your New Year’s resolutions; it’s about saving smartly.
10 New Year’s Resolutions You Can Do to Save Money
Now, let’s look into ten financial New Year’s resolutions that can improve your money-saving game this year.
Record Your Expenses
Start by recording every expense, no matter how small, using a journal or an expense tracking app. This habit helps in identifying unnecessary spending and finding areas where you can save. Regularly reviewing your expenses also makes you more conscious of your spending habits, encouraging more thoughtful purchases.
Calculate Your Net Worth
Knowing your net worth provides a realistic picture of your financial situation. This calculation adds up your assets (like savings and property) and subtracts your debts. It’s a crucial step in understanding your financial health and making informed financial decisions.
Set Saving Goals
Establish S.M.A.R.T. saving goals: Specific, Measurable, Achievable, Relevant, and Time-bound. Whether it’s saving for a dream holiday, a downpayment for a house, or just an emergency fund, having clear goals helps you stay focused and motivated in your saving journey.
Create a Spending Plan and Pay Debts
Develop a monthly spending plan that sets aside funds for necessities, debt repayment, and savings before spending on anything. Prioritizing debt repayment is also an essential financial New Year’s resolution, as it reduces the amount paid in interest and helps improve your credit score. Effective budgeting ensures you live within your means while steadily improving your financial health.
Start an Emergency Fund
As we’ve seen previously, building an emergency fund is crucial for financial security. Try to save up enough money to cover your living costs for three to six months. Emergency funds can help you out in unexpected situations like losing your job or facing health issues. With an emergency fund, you won’t have to rely on borrowing money when times get tough.
Boost Retirement Savings
Increasing your retirement savings, whether through employer-sponsored plans or personal retirement accounts, ensures long-term financial security. The earlier you start saving for retirement, the more time your money has to grow through the power of interest.
Review Insurance Needs
Regularly reviewing your insurance coverage is important. Check with your agent, because certain life and health insurance policies also offer savings and investment benefits. Ensuring you have the right coverage can contribute to your New Year’s resolutions to save money.
Learn How to Invest
Educating yourself on various investment options leads to smarter decisions for your financial future. Investments can range from stocks and bonds to real estate and mutual funds. Understanding the risks and rewards of each type of investment can significantly enhance your wealth over time.
Seek Additional Income Sources
Exploring ways to earn additional income, like starting a side business, freelancing, or part-time work, can supplement your main income. This extra money can be directed towards savings or investments, accelerating your financial goals.
Improve Financial Literacy
Continuously educate yourself about personal finance, investment trends, and market dynamics. You can do this by attending seminars, watching educational videos, or simply reading the news. Understanding financial concepts and staying informed about the latest financial trends empowers you to make better decisions and avoid common financial mistakes.
Start Your Money-Saving New Year’s Resolutions Today
Adopting the best financial New Year’s resolutions can significantly improve your financial health. To use and save money intelligently, it’s essential to:
- record expenses
- calculate your net worth
- set SMART saving goals
- create a spending plan
- start an emergency fund
- boost retirement savings
- review insurance needs
- learn about investments
- seek additional income
- continuously improve your financial literacy
Remember, these steps are not just about building your savings. These resolutions also help you handle emergencies, keep a good credit score, and steer you away from bad spending habits. In short, smart saving equals a healthier financial life.
Wondering how you can access your credit score? Finscore’s alternative credit scoring might just be what you need. Contact us today to begin a financially smarter and more prosperous year ahead!